Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Jan. 17, 2017 | |
Document and Entity Information | ||
Entity Registrant Name | SUPERNUS PHARMACEUTICALS INC | |
Entity Central Index Key | 1,356,576 | |
Document Type | 10-Q/A | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | true | |
Amendment Description | Unless the context requires otherwise, the words "Supernus," "we," "our," and "the Company" refer to Supernus Pharmaceuticals, Inc. and its subsidiaries. Supernus Pharmaceuticals, Inc. (the Company) is filing this Amendment No. 1 on Form 10-Q/A (the Amended Form 10-Q) to its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2016 (the Original Form 10-Q), which was originally filed with the U.S. Securities and Exchange Commission (SEC) on May 10, 2016 (the Original Filing Date), to reflect the restatement of consolidated financial statements (Restatement) as described below. In this Amended Form 10-Q for the fiscal quarter ended March 31, 2016, we are restating our previously issued and unaudited consolidated financial statements and the related disclosures for the three month periods ended March 31, 2016 and March 31, 2015. As discussed in further detail below and in Note 2 to the accompanying consolidated financial statements, the Restatement is the result of a misapplication in the guidance on accounting for revenue recognition related to the sale of future revenues (as described below). We assessed the impact of this misapplication on our prior interim and annual consolidated financial statements and concluded that the impact was material to these consolidated financial statements. Consequently, we have restated the prior period consolidated financial statements identified above. All amounts in this Amended Form 10-Q affected by the Restatement reflect such amounts as restated. For a more detailed explanation of these matters and resulting restatements, please see Part I, Item 1: Financial Statements – Note 2 to the Consolidated Financial Statements; Part I, Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations – Restatement of Previously Issued Consolidated Financial Statements; and Part I, Item 4: Controls and Procedures. For the convenience of the reader, this Amended Form 10-Q sets forth the Original Form 10-Q for the three month period ended March 31, 2016 in its entirety, as amended by and to reflect the Restatement and includes certain restated information for the three month period ended March 31, 2015. | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | No | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 50,121,242 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Current assets: | |||
Cash and cash equivalents | $ 19,830 | $ 33,498 | $ 25,158 |
Marketable securities | 25,427 | 28,692 | 39,678 |
Accounts receivable, net | 30,651 | 25,908 | 19,271 |
Inventories, net | 13,044 | 12,587 | 13,702 |
Prepaid expenses and other current assets | 5,003 | 5,261 | 3,640 |
Total current assets | 93,955 | 105,946 | 101,449 |
Long term marketable securities | 68,790 | 55,009 | 27,315 |
Property and equipment, net | 3,866 | 3,874 | 2,481 |
Deferred legal fees | 11,444 | 22,503 | 7,672 |
Intangible assets, net | 16,108 | 976 | 167 |
Other non-current assets | 311 | 318 | 321 |
Total assets | 194,474 | 188,626 | 139,405 |
Current liabilities: | |||
Accounts payable | 2,646 | 4,314 | 859 |
Accrued sales deductions | 28,697 | 26,794 | 10,025 |
Accrued expenses | 22,915 | 25,153 | 16,482 |
Non-recourse liability related to sale of future royalties - current portion | 1,067 | 497 | |
Deferred licensing revenue | 208 | 176 | 143 |
Total current liabilities | 55,533 | 56,934 | 27,509 |
Deferred licensing revenue, net of current portion | 1,658 | 1,390 | 1,238 |
Convertible notes, net | 5,627 | 7,085 | 11,476 |
Non-recourse liability related to sale of future royalties - long term | 29,621 | 30,031 | 30,179 |
Other non-current liabilities | 4,391 | 4,325 | 2,561 |
Derivative liabilities | 535 | 854 | 2,691 |
Total liabilities | 97,365 | 100,619 | 75,654 |
Stockholders' equity: | |||
Common stock, $0.001 par value, 130,000,000 shares authorized at March 31, 2016, December 31, 2015 and March 31, 2015; 49,421,236, 49,004,674 and 47,513,429 shares issued and outstanding at March 31, 2016, December 31, 2015 and March 31, 2015, respectively | 49 | 49 | 48 |
Additional paid-in capital | 267,576 | 263,955 | 252,483 |
Accumulated other comprehensive income (loss) | 168 | (488) | (65) |
Accumulated deficit | (170,684) | (175,509) | (188,715) |
Total stockholders' equity | 97,109 | 88,007 | 63,751 |
Total liabilities and stockholders' equity | $ 194,474 | $ 188,626 | $ 139,405 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Consolidated Balance Sheets | |||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 130,000,000 | 130,000,000 | 130,000,000 |
Common stock, shares issued | 49,421,236 | 49,004,674 | 47,513,429 |
Common stock, shares outstanding | 49,421,236 | 49,004,674 | 47,513,429 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenue | ||
Net product sales | $ 43,025 | $ 28,097 |
Royalty revenues | 1,119 | 605 |
Licensing revenue | 50 | 36 |
Total revenue | 44,194 | 28,738 |
Costs and expenses | ||
Cost of product sales | 2,035 | 1,618 |
Research and development | 10,562 | 3,683 |
Selling, general and administrative | 25,160 | 19,403 |
Total costs and expenses | 37,757 | 24,704 |
Operating income | 6,437 | 4,034 |
Other income (expense) | ||
Interest income | 331 | 113 |
Interest expense | (179) | (381) |
Interest expense non-recourse liability related to sale of future royalties | (1,279) | (759) |
Changes in fair value of derivative liabilities | 101 | (49) |
Loss on extinguishment of debt | (382) | (2,134) |
Other expense | (4) | |
Total other expense | (1,412) | (3,210) |
Earnings before income taxes | 5,025 | 824 |
Income tax expense | 200 | 86 |
Net income | $ 4,825 | $ 738 |
Income per common share: | ||
Basic (in dollars per share) | $ 0.10 | $ 0.02 |
Diluted (in dollars per share) | $ 0.08 | $ 0.02 |
Weighted-average number of common shares outstanding: | ||
Basic (in shares) | 49,240,099 | 44,563,299 |
Diluted (in shares) | 51,152,072 | 44,901,298 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Consolidated Statements of Comprehensive Income | ||
Net income | $ 4,825 | $ 738 |
Other comprehensive income: | ||
Unrealized net gain on marketable securities | 656 | 89 |
Other comprehensive income: | 656 | 89 |
Comprehensive income | $ 5,481 | $ 827 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities | ||
Net income | $ 4,825 | $ 738 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Loss on extinguishment of debt | 382 | 2,134 |
Change in fair value of derivative liability | (101) | 49 |
Depreciation and amortization | 429 | 214 |
Non cash interest expense, net/interest income, net | 155 | 463 |
Non-recourse liability related to sale of future royalties | 1,279 | 759 |
Non-cash royalty revenue | (1,119) | (605) |
Share-based compensation expense | 1,359 | 902 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (4,744) | (2,001) |
Inventories | (457) | (261) |
Prepaid expenses and other assets | 260 | 38 |
Accounts payable | (1,691) | (1,004) |
Accrued sales deduction | 1,903 | 1,505 |
Accrued expenses | (5,995) | (1,883) |
Deferred licensing revenue | 300 | (36) |
Other non-current liabilities | 73 | (1,277) |
Net cash (used in) provided by operating activities | (3,142) | (265) |
Cash flows from investing activities | ||
Purchases of marketable securities | (17,335) | (17,967) |
Sales and maturities of marketable securities | 7,400 | 8,731 |
Purchases of property and equipment | (279) | (189) |
Deferred legal fees | (436) | (1,695) |
Net cash used in investing activities | (10,650) | (11,120) |
Cash flows from financing activities | ||
Proceeds from issuance of common stock | 124 | 147 |
Net cash provided by financing activities | 124 | 147 |
Net change in cash and cash equivalents | (13,668) | (11,238) |
Cash and cash equivalents at beginning of period | 33,498 | 36,396 |
Cash and cash equivalents at end of period | 19,830 | 25,158 |
Noncash financial activity: | ||
Conversion of convertible notes and interest make-whole | 2,138 | 21,176 |
Deferred legal fees included in accounts payable and accrued expenses | $ 3,779 | $ 3,176 |
Organization and Business
Organization and Business | 3 Months Ended |
Mar. 31, 2016 | |
Organization and Business | |
Organization and Business | 1. Organization and Business Supernus Pharmaceuticals, Inc. (the Company) was incorporated in Delaware on March 30, 2005, and commenced operations on December 22, 2005. The Company is a specialty pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases, including neurological and psychiatric disorders. The Company markets two epilepsy products, Oxtellar XR and Trokendi XR, and has several proprietary product candidates in clinical development that address the psychiatry market. The Company commenced the commercialization of Oxtellar XR and Trokendi XR in 2013. |
Restatement of Financial Statem
Restatement of Financial Statements | 3 Months Ended |
Mar. 31, 2016 | |
Restatement of Financial Statements | |
Restatement of Financial Statements | 2. Restatement of Financial Statements In July 2014, the company entered into a royalty monetization transaction and recorded the transaction as revenue. In October 2016, the Company submitted to the U.S. Securities and Exchange Commission’s (the SEC) Office of the Chief Accountant (the OCA) a request for post-accounting review of the royalty monetization transaction from 2014. On November 9, 2016, the OCA completed its review and informed the Company that the royalty monetization transaction should have been recorded as a debt obligation in 2014. As a result, on November 10, 2016, the Company’s Audit Committee concluded that the Company’s financial statements for the years ended December 31, 2014 and December 31, 2015, and the interim quarterly reports in those years beginning with the third quarter of 2014, and the interim quarterly reports for the first and second quarters in 2016 and related reports of the Company’s independent registered public accounting firms thereon, should no longer be relied upon and will be restated. The Company is restating in this Quarterly Report its financial statements for the three month period ended March 31, 2016 and March 31, 2015. This restatement results in noncash, financial statement corrections and will have no impact on the Company’s current or previously reported cash and marketable securities position or net product sales . The Company has also made corrections to reflect (i) the recording during the fourth quarter of 2014 of a current tax expense related to an increase in our reserve for an uncertain tax position related to alternative minimum taxes that had been previously recognized in the second quarter of 2015 and (ii) an increase in Selling, General and Administrative Expense in 2014 which is fully offset by a corresponding decrease in Selling, General and Administrative Expense in 2015. This adjustment is the result of the recognition of stock compensation expense over a period of twelve months as opposed to four years related to certain option grants granted in January 2014. Additionally, during the first quarter of 2015, the Company purchased a Certificate of Deposit (CD) that has been continually renewed on a quarterly basis. This CD has 91 days to maturity and the Company incorrectly classified this amount as cash and cash equivalents on the balance sheets at March 31, 2015, June 30, 2015, September 30, 2015 and December 31, 2015. We have corrected the balance sheets in all periods to reflect the reclassification from cash and cash equivalents to current marketable securities. An adjustment was made to the Statement of Cash Flows for the three months ended March 31, 2015 to change cash used in investing activities, with an offset to cash provided by operations for certain accrued legal fees that have been deferred. The impact of the restatement and other corrections on the condensed Consolidated Balance Sheet, Consolidated Statement of Operations and Consolidated Statement of Cash Flows as of and for the three month periods ended March 31, 2016 and March 31, 2015 is presented below, in thousands except share and per share data. Three Months Ended March 31, 2016 Consolidated Statement of Operations As Previously Restatement Other (unaudited) Reported Adjustments Corrections As Restated Royalty revenue $ — $ $ $ Total revenue Operating income Interest expense — non-recourse liability related to sale of future royalties — ) ) Total other expense ) ) ) Earnings before income taxes ) Income tax expense Net income ) ) Three Months Ended March 31, 2016 As Previously Restatement Other Consolidated Statements of Cash Flows (unaudited) Reported Adjustments Corrections As Restated Net cash used in investing activities $ ) $ $ ) Net change in cash and cash equivalents ) ) As of March 31, 2016 As Previously Restatement Other Consolidated Balance Sheet (unaudited) Reported Adjustments Corrections As Restated Accrued expenses $ $ $ Non-recourse liability related to sale of future royalties — current portion — Total current liabilities Non-recourse liability related to sale of future royalties — long term — Total liabilities Accumulated deficit ) ) ) ) Total stockholders’ equity ) ) Three Months Ended March 31, 2015 Consolidated Statement of Operations As Previously Restatement Other (unaudited) Reported Adjustments Corrections As Restated Royalty revenue $ — $ $ $ Total revenue Selling, general and administrative Total costs and expenses Operating income ) Interest expense — non-recourse liability related to sale of future royalties — ) ) Total other expense ) ) ) Earnings before income taxes ) ) Income tax expense Net Income ) ) Three Months Ended March 31, 2015 As Previously Restatement Other Consolidated Statements of Cash Flows (unaudited) Reported Adjustments Corrections As Restated Net cash provided by (used in) operating activities $ $ ) $ ) Net cash used in investing activities ) ) Net change in cash and cash equivalents ) ) ) As of March 31, 2015 As Previously Restatement Other Consolidated Balance Sheet (unaudited) Reported Adjustments Corrections As Restated Cash and cash equivalents $ $ ) $ Marketable securities Accrued expenses Total current liabilities Non-recourse liability related to sale of future royalties — long term — Total liabilities Additional paid-in capital Accumulated deficit ) ) ) ) Total stockholders’ equity ) ) As of December 31, 2015 As Previously Restatement Other Consolidated Balance Sheet Reported Adjustments Corrections As Restated Cash and cash equivalents $ $ ) $ Marketable securities Accrued expenses Non-recourse liability related to sale of future royalties — current portion — Total current liabilities Non-recourse liability related to sale of future royalties — long term — Total liabilities Accumulated deficit ) ) ) ) Total stockholders’ equity ) ) |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Basis of Presentation The Company’s consolidated financial statements include the accounts of Supernus Pharmaceuticals, Inc. and Supernus Europe Ltd., collectively referred to herein as “Supernus” or “the Company.” All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s unaudited consolidated financial statements have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) for interim financial information. As permitted under Generally Accepted Accounting Principles in the United States (U.S. GAAP), certain notes and other information have been omitted from the interim unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q/A. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2015 filed with the SEC. In the opinion of management, the consolidated financial statements reflect all adjustments necessary to fairly present the Company’s financial position, results of operations, and cash flows for the periods presented. These adjustments are of a normal recurring nature. The Company currently operates in one business segment. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the Company’s future financial results. Marketable Securities Marketable securities consist of investments in U.S. Treasuries, various U.S. governmental agency debt securities, corporate bonds and other fixed income securities. The Company’s investments are classified as available for sale. Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income, which is a separate component of stockholders’ equity. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. The Company places all investments with government, industrial, or financial institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. The Company established the Supernus Supplemental Executive Retirement Plan (SERP) for the sole purpose of receiving funds for executives from a previous SERP and providing a continuing deferral program under the Supernus SERP. As of March 31, 2016 and December 31, 2015, the fair value of the SERP was $255,000 and $263,000, respectively. These were held in mutual fund investments. The fair value of these assets is included within other non-current assets on the consolidated balance sheets. A corresponding noncurrent liability is also included in the consolidated balance sheets to reflect the Company’s obligation for the SERP. The Company has not made, and has no plans to make, contributions to the SERP. The securities are restricted in nature and can only be used for purposes of paying benefits under the SERP. Accounts Receivable, net Accounts receivable are reported on the consolidated balance sheets at outstanding amounts, less an allowance for doubtful accounts and discounts. The Company extends credit without requiring collateral. The Company writes off uncollectible receivables when the likelihood of collection is remote. The Company evaluates the collectability of accounts receivable on a regular basis. An allowance, when needed, is based upon various factors including the financial condition and payment history of customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. No accounts have been written off as of March 31, 2016 and December 31, 2015. The Company recorded an allowance of approximately $4.0 million and $3.8 million for expected sales discounts as of March 31, 2016 and December 31, 2015, respectively. Deferred Financing Costs Deferred financing costs consist of financing costs incurred by the Company in connection with the closing of the Company’s 7.50% Convertible Senior Secured Notes and Secured Notes Payable (see Note 9). The Company amortizes deferred financing costs over the term of the related debt using the effective interest method. When extinguishing debt, the related deferred financing costs are written off. Revenue Recognition Revenue from product sales is recognized when persuasive evidence of an arrangement exists; delivery has occurred and title to the product and associated risk of loss has passed to the customer; the price is fixed or determinable; collection from the customer has been reasonably assured; all performance obligations have been met; and returns and allowances can be reasonably estimated. Product sales are recorded net of estimated rebates, chargebacks, discounts, co-pay assistance and other deductions as well as estimated product returns (collectively, “sales deductions”). Our products are distributed through wholesalers and pharmaceutical distributors. Each of these wholesalers and distributors will take title and ownership to the product upon physical receipt of the product and then distribute our products to pharmacies. Royalty Revenue In the third quarter of 2014, the Company received a $30.0 million payment pursuant to a royalty agreement related to the purchase by HC Royalty of certain of the Company’s rights under the agreement with United Therapeutics Corporation related to the commercialization of Orenitram. We have recorded a non-recourse liability related to this transaction and have begun to amortize this amount to recognize royalty revenue as royalties are received by HC Royalty from United Therapeutics. We also recognize non-cash interest expense related to this liability that accrues at an effective interest rate determined based on projections of HC Royalty’s rate of return. We recognized royalty revenue of $1.1 million and $0.6 million for the three months ended March 31, 2016 and 2015, respectively. We recognized interest expense of $1.3 million and $0.8 million for the three months ended March 31, 2016 and 2015, respectively. Sales Deductions Allowances for estimated sales deductions are provided for the following: · Rebates. Rebates include mandated discounts under the Medicaid Drug Rebate Program, the Medicare coverage gap program, as well as negotiated discounts with commercial healthcare providers. Rebates are amounts owed after the final dispensing of products to a benefit plan participant and are based upon contractual agreements or legal requirements with the public sector (e.g. Medicaid) and with private sector benefit providers. The allowance for rebates is based on statutory and contractual discount rates and expected claimed rebates paid based on a plan provider’s utilization. Rebates are generally invoiced and paid quarterly in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known or estimated prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust balances of such rebates to reflect the actual expenditures of the Company with respect to these programs, which would affect revenue in the period of adjustment. · Chargebacks. Chargebacks are discounts that occur when contracted customers purchase directly from an intermediary distributor or wholesaler. Contracted customers, which currently consist primarily of Public Health Service institutions and federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The distributor or wholesaler, in turn, charges back the difference between the price initially paid by the distributor or wholesaler and the discounted price paid to the distributor or wholesaler by the customer. The allowance for distributor/wholesaler chargebacks is based on known sales to contracted customers. · Distributor/Wholesaler deductions and discounts. U.S. specialty distributors and wholesalers are offered various forms of consideration including allowances, service fees and prompt payment discounts as consideration for distributing our products. Distributor allowances and service fees arise from contractual agreements with distributors and are generally a percentage of the purchase price paid by the distributors and wholesalers. Wholesale customers are offered a prompt pay discount for payment within a specified period. · Co-pay assistance. Patients who pay in cash or have commercial insurance and meet certain eligibility requirements may receive co-pay assistance from the Company. The intent of this program is to reduce the patient’s out of pocket costs. Liabilities for co-pay assistance are based on actual program participation and estimates of program redemption using data provided by third-party administrators. · Returns. Sales of our products are not subject to a general right of return; however, the Company will accept product that is damaged or defective when shipped directly from our warehouse. The Company will accept expired product six months prior and up to 12 months subsequent to its expiry date. Product that has been used to fill patient prescriptions is no longer subject to any right of return. Milestone Payments Milestone payments on licensing agreements are recognized as revenue when the collaborative partner acknowledges completion of the milestone and substantive effort (i.e., effort consistent with amount of the milestone) was necessary to achieve the milestone. Management may recognize revenue contingent upon the achievement of a milestone in its entirety in the period in which the milestone is achieved only if the milestone meets all the criteria to be considered substantive. The Company recorded no milestone revenue during the three months ended March 31, 2016 and March 31, 2015. Cost of Product Sales The cost of product sales consists primarily of materials, third-party manufacturing costs, freight and distribution costs, allocation of labor, quality control and assurance, and other manufacturing overhead costs. Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets to the amounts expected to be realized. The Company accounts for uncertain tax positions in its consolidated financial statements when it is more-likely-than-not that the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company’s policy is to recognize any interest and penalties related to income taxes in income tax expense. Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Lease (Topic 842)”. The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU more closely aligns the treatment of debt issuance costs with debt discounts and premiums and requires debt issuance costs be presented as a direct deduction from the carrying amount of the related debt. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. This guidance has been applied on a retrospective basis and the impact is reflected in the as previously reported column in Note 2. The adoption of ASU No. 2015-03 resulted in a reclassification of deferred financing costs of $232,000 and $104,000 from asset to liability classification on the Company’s consolidated financial statements as of March 31, 2015 and December 31, 2015, respectively. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 4. Fair Value of Financial Instruments The fair value of an asset or liability should represent the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Such transactions to sell an asset or transfer a liability are assumed to occur in the principal or most advantageous market for the asset or liability. Accordingly, fair value is determined based on a hypothetical transaction at the measurement date, considered from the perspective of a market participant rather than from a reporting entity’s perspective. The Company reports assets and liabilities that are measured at fair value using a three tier or level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: · Level 1—Inputs are unadjusted quoted prices in active markets for identical assets that the Company has the ability to access at the measurement date. · Level 2—Inputs are quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (interest rates, yield curves, etc.) and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). · Level 3—Unobservable inputs that reflect the Company’s own assumptions, based on the best information available, including the Company’s own data. In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value, in thousands: Fair Value Measurements at March 31, 2016 (unaudited) Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable March 31, Markets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ Fair Value Measurements at December 31, 2015 (restated) Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable December 31, Markets Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ Fair Value Measurements at March 31, 2015 (unaudited) (restated) Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable March 31, Markets Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ The fair value of the restricted marketable securities is included within other non-current assets in the consolidated balance sheets. The Company’s Level 1 assets include cash held with banks, a CD and money market funds. Level 2 assets include the SERP assets, commercial paper and investment grade corporate bonds and other fixed income securities. Level 2 securities are valued using third-party pricing sources that apply applicable inputs and other relevant data into their models to estimate fair value. Level 3 liabilities include the estimated fair value of the interest make-whole liability associated with the Company’s 7.50% Convertible Senior Secured Notes due 2019 (the Notes), which are recorded as derivative liabilities. The fair value of the interest make-whole liability of the Notes was calculated using a binomial-lattice model with the following key assumptions as of March 31, 2016, unaudited: Volatility 45% Stock Price as of March 31, 2016 $15.21 per share Credit Spread 900 bps Term 1.1 years Dividend Yield 0.0% Significant changes to these assumptions could result in increases/decreases to the fair value of the derivative liabilities. Changes in the fair value of the interest make-whole liability are recognized as a component of Other Income (Expense) in the Consolidated Statements of Operations. The following table presents information about the Company’s Level 3 liabilities as of December 31, 2015 and March 31, 2016 that are included in the Non-Current Liabilities section of the Consolidated Balance Sheets, in thousands: Three Months ended March 31, 2016 (unaudited) Balance at December 31, 2015 $ Changes in fair value of derivative liabilities included in earnings ) Reduction due to conversion of debt to equity ) Balance at March 31, 2016 $ The carrying value, face value and estimated fair value of the Notes was approximately $5.6 million, $6.6 million and $20.0 million, respectively, as of March 31, 2016. The fair value was estimated based on actual trade information as well as quoted prices provided by bond traders, which would be characterized within Level 2 of the fair value hierarchy. This fair value amount gives recognition to the value of the interest make-whole liability and the value of the conversion option. Upon issuance these were accounted for as derivative liabilities and additional paid-in-capital, respectively. The carrying amounts of other financial instruments, including accounts receivable, accounts payable and accrued expenses approximate fair value due to their short-term maturities. Unrestricted marketable securities held by the Company were as follows, in thousands: At March 31, 2016 (unaudited): Available for Sale Amortized Gross Gross Fair Value Corporate debt securities $ ) $ At December 31, 2015 ( restated ) : Available for Sale Amortized Gross Gross Fair Value Corporate debt securities $ ) $ At March 31, 2015 (unaudited) ( restated ) : Available for Sale Amortized Gross Gross Fair Value Corporate debt securities $ $ $ ) $ The contractual maturities of the unrestricted available for sale marketable securities held by the Company were as follows, in thousands: March 31, 2016 (unaudited) Less Than 1 Year $ 1-5 years Greater Than 5 Years — Total $ The Company has not experienced any other-than-temporary losses on its marketable securities and restricted marketable securities. The cost of securities sold is calculated using the specific identification method. |
Inventories
Inventories | 3 Months Ended |
Mar. 31, 2016 | |
Inventories | |
Inventories | 5. Inventories Inventories consist of the following, in thousands: March 31, December 31, March 31, 2016 2015 2015 (unaudited) (unaudited) Raw materials $ $ Work in process Finished goods $ $ $ |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2016 | |
Property and Equipment | |
Property and Equipment | 6. Property and Equipment Property and equipment consist of the following, in thousands: March 31, December 31, March 31, 2016 2015 2015 (unaudited) (unaudited) Computer equipment $ $ $ Software Lab equipment and furniture Leasehold improvements Construction in progress — Less accumulated depreciation and amortization ) ) ) $ $ $ Depreciation and amortization expense on property and equipment was approximately $287,000 and $156,000 for the three months ended March 31, 2016 and March 31, 2015, respectively. |
Deferred Legal Fees and Intangi
Deferred Legal Fees and Intangible Assets | 3 Months Ended |
Mar. 31, 2016 | |
Deferred Legal Fees and Intangible Assets | |
Deferred Legal Fees and Intangible Assets | 7. Deferred Legal Fees and Intangible Assets Deferred legal fees have been incurred in connection with patents for Oxtellar XR and Trokendi XR. As of March 31, 2016 and December 31, 2015, the Company had deferred legal fees of $11.4 million and $22.5 million, respectively. The following sets forth the gross carrying amount and related accumulated amortization of the intangible asset, in thousands: March 31, 2016 (unaudited) December 31, 2015 Weighted- Gross Carrying Accumulated Gross Carrying Accumulated Average Life Amount Amortization Amount Amortization Capitalized patent defense costs $ $ $ $ The Company prevailed in a lawsuit related to Oxtellar XR in February 2016, at which time the Company began amortizing the costs associated with that litigation. The net book value of intangible assets was $16.1 million as of March 31, 2016 and was $1.0 million as of December 31, 2015. The increase in intangible assets reflects the successful outcome of the lawsuit related to Oxtellar XR in February 2016. There is an offsetting reduction in the amount carried as deferred legal fees, as described above. Amortization expense on intangible assets was approximately $142,000 and $57,000 for the three months ended March 31, 2016 and 2015, respectively. There were no indicators of impairment identified at March 31, 2016, December 31, 2015 or March 31, 2015. |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Mar. 31, 2016 | |
Accrued Expenses | |
Accrued Expenses | 8. Accrued Expenses Accrued expenses are comprised of the following, in thousands, ( restated ) : March 31, December 31, March 31 2016 2015 2015 (unaudited) (unaudited) Accrued professional fees $ $ $ Accrued compensation Accrued clinical trial and clinical supply costs Accrued interest expense Accrued sales and marketing expenses Accrued product costs Other accrued expenses $ $ $ |
Convertible Senior Secured Note
Convertible Senior Secured Notes | 3 Months Ended |
Mar. 31, 2016 | |
Convertible Senior Secured Notes | |
Convertible Senior Secured Notes | 9. Convertible Senior Secured Notes The table below summarizes activity related to the Notes from issuance on May 3, 2013 through March 31, 2016, in thousands: Gross proceeds $ Initial value of interest make-whole derivative reported as debt discount ) Conversion option reported as debt discount and APIC ) Conversion of debt to equity - principal ) Conversion of debt to equity - accretion of debt discount and deferred financing costs Accretion of debt discount and deferred financing costs December 31, 2015 carrying value, restated Conversion of debt to equity - principal ) Conversion of debt to equity - accretion of debt discount and deferred financing costs Accretion of debt discount and deferred financing costs March 31, 2016 carrying value, unaudited $ During the three month period ended March 31, 2016, approximately $2.0 million of the Notes were presented to the Company for conversion. Accordingly, the Company issued approximately 0.4 million shares of common stock in conversion of the principal amount of the Notes. The Company issued an additional 21,000 shares of common stock in settlement of the interest make-whole provision related to the converted Notes. As a result of the conversions, the Company incurred a loss of approximately $0.4 million on extinguishment of debt during the three months ended March 31, 2016, which is included as a separate component of other income (expense) on the consolidated statement of operations. During the three month period ended March 31, 2015, as a result of approximately $21.4 million in note conversions, the Company incurred a loss of approximately $2.1 million on extinguishment of debt. |
Summary Stockholders' Equity
Summary Stockholders' Equity | 3 Months Ended |
Mar. 31, 2016 | |
Summary Stockholders' Equity | |
Summary Stockholders' Equity | 10. Summary Stockholders’ Equity The following summary table provides details related to the activity in certain captions within Stockholders’ Equity for the three month period ended March 31, 2016, in thousands. Common Stock Additional Paid-in (unaudited) Balance, December 31, 2015 $ $ Share-based compensation — Exercise of stock options — Equity issued on note conversion Balance, March 31, 2016 $ $ |
Share-Based Payments
Share-Based Payments | 3 Months Ended |
Mar. 31, 2016 | |
Share-Based Payments | |
Share-Based Payments | 11. Share-Based Payments The Company has adopted the Supernus Pharmaceuticals, Inc. 2012 Equity Incentive Plan (the 2012 Plan), which is stockholder approved, and provides for the grant of stock options and certain other awards, including stock appreciation rights (SAR), restricted and unrestricted stock, stock units, performance awards, cash awards and other awards that are convertible into or otherwise based on the Company’s common stock, to the Company’s key employees, directors, and consultants and advisors. The 2012 Plan is administered by the Company’s Board of Directors and provides for the issuance of up to 4,000,000 shares of the Company’s common stock upon the exercise of stock awards. Option awards are granted with an exercise price equal to the estimated fair value of the Company’s common stock at the grant date. Those option awards generally vest in four annual installments, starting on the first anniversary of the date of grant and have ten year contractual terms. Option awards granted to the directors generally vest over a one year term. Share-based compensation recognized related to the grant of employee and non-employee stock options, SAR, potential Employee Stock Purchase Plan (ESPP) awards and non-vested stock was as follows, in thousands: March 31, 2016 2015 (unaudited) Research and development $ $ Selling, general and administrative Total $ $ The following table summarizes stock option and SAR activity: Number of Weighted- Weighted- Outstanding, December 31, 2015 $ Granted (unaudited) $ Exercised (unaudited) ) $ Forfeited or expired (unaudited) ) $ Outstanding, March 31, 2016 (unaudited) $ As of December 31, 2015: Vested and expected to vest $ Exercisable $ As of March 31, 2016: Vested and expected to vest (unaudited) $ Exercisable (unaudited) $ |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per Share | |
Earnings per Share | 12. Earnings per Share Basic income per common share is determined by dividing income attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of common stock equivalents. Diluted income per share is computed by dividing the income attributable to common stockholders by the weighted-average number of common share equivalents outstanding for the period. The treasury stock method is used to determine the dilutive effect of the Company’s stock option grants, SARs, and potential ESPP awards, and the if-converted method is used to determine the dilutive effect of the Company’s Notes. The following common stock equivalents were excluded in the calculation of diluted income per share because their effect would be anti-dilutive as applied to the income from continuing operations applicable to common stockholders for the three months ended March 31, 2016 and March 31, 2015: Three Months ended March 31, 2016 2015 (unaudited) Shares underlying Convertible Senior Secured Notes — Warrants to purchase common stock — The following table sets forth the computation of basic and diluted net income per share for the three months ended March 31, 2016 and March 31, 2015, in thousands, except share and per share amounts, restated: Three Months ended March 31, 2016 2015 (unaudited) Numerator, in thousands: Net income used for calculation of basic EPS $ $ Interest expense on convertible debt — Changes in fair value of derivative liabilities ) — Loss on extinguishment of debt Loss on extinguishment of outstanding debt, as if converted ) — Total adjustments ) — Net income used for calculation of diluted EPS $ $ Denominator: Weighted average shares outstanding, basic Effect of dilutive potential common shares: Shares underlying Convertible Senior Secured Notes — Shares issuable to settle interest make-whole derivatives — Stock options, stock appreciation rights, and non-vested stock options Total potential dilutive common shares Weighted average shares outstanding, diluted Net income per share, basic $ $ Net income per share, diluted $ $ |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Taxes | |
Income Taxes | 13. Income Taxes During the three months ended March 31, 2016, the Company had pre-tax income of $5.0 million. The provision for Federal and state income taxes related to the pre-tax income has been largely offset by the utilization of available net operating loss carryforwards (NOL’s). Accordingly, the Company reduced its valuation allowance against its deferred tax assets and recognized an income tax expense for the jurisdictions that did not have sufficient NOL’s to offset the expected tax expense. During the three months ended March 31, 2016, the Company recorded $0.2 million of current tax expense primarily related to an increase in our reserve for an uncertain tax position related to the Alternative Minimum Tax. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies The Company has concurrent leases for office and lab space that extend through April 2020. The Company may elect to extend the term of the leases for an additional five-year term. The leases provide for a tenant improvement allowance of approximately $2.1 million in aggregate. During the three months ended March 31, 2016, none of the allowance was utilized. During the three months ended March 31, 2015, none of the allowance was utilized. As of March 31, 2016, $0.5 million remains available for tenant improvements. Rent expense for the leased facilities and leased vehicles for the three months ended March 31, 2016 and March 31, 2015 was approximately, $0.7 million in each period. Future minimum lease payments under non-cancelable operating leases as of March 31, 2016 are as follows, in thousands, unaudited: Year ending December 31: 2016 (remaining) $ 2017 2018 2019 Thereafter $ The Company has obtained exclusive licenses from third parties for proprietary rights to support the product candidates in the Company’s psychiatry portfolio. Under license agreements with Afecta Pharmaceuticals, Inc. (Afecta), the Company has obtained exclusive worldwide rights to selected product candidates, including an exclusive license to SPN-810 (molindone hydrochloride). The Company does not owe any future milestone payments for SPN-810. The Company is obligated to pay royalties in the low-single digits to Afecta based on worldwide net sales of each of these products. The Company has also entered into a purchase and sale agreement with Rune Healthcare Limited (Rune), where the Company obtained the exclusive worldwide rights to a product concept from Rune. There are no future milestone payments due to Rune under this agreement. If the Company receives approval to market and sell any products based on the Rune product concept for SPN-809 (viloxazine hydrochloride), the Company is obligated to pay royalties to Rune based on net sales worldwide in the low single digits. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The Company’s consolidated financial statements include the accounts of Supernus Pharmaceuticals, Inc. and Supernus Europe Ltd., collectively referred to herein as “Supernus” or “the Company.” All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s unaudited consolidated financial statements have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (SEC) for interim financial information. As permitted under Generally Accepted Accounting Principles in the United States (U.S. GAAP), certain notes and other information have been omitted from the interim unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q/A. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2015 filed with the SEC. In the opinion of management, the consolidated financial statements reflect all adjustments necessary to fairly present the Company’s financial position, results of operations, and cash flows for the periods presented. These adjustments are of a normal recurring nature. The Company currently operates in one business segment. The results of operations for the three months ended March 31, 2016 are not necessarily indicative of the Company’s future financial results. |
Marketable Securities | Marketable Securities Marketable securities consist of investments in U.S. Treasuries, various U.S. governmental agency debt securities, corporate bonds and other fixed income securities. The Company’s investments are classified as available for sale. Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income, which is a separate component of stockholders’ equity. Realized gains and losses, and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. The Company places all investments with government, industrial, or financial institutions whose debt is rated as investment grade. The Company classifies all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. The Company established the Supernus Supplemental Executive Retirement Plan (SERP) for the sole purpose of receiving funds for executives from a previous SERP and providing a continuing deferral program under the Supernus SERP. As of March 31, 2016 and December 31, 2015, the fair value of the SERP was $255,000 and $263,000, respectively. These were held in mutual fund investments. The fair value of these assets is included within other non-current assets on the consolidated balance sheets. A corresponding noncurrent liability is also included in the consolidated balance sheets to reflect the Company’s obligation for the SERP. The Company has not made, and has no plans to make, contributions to the SERP. The securities are restricted in nature and can only be used for purposes of paying benefits under the SERP. |
Accounts Receivable, net | Accounts Receivable, net Accounts receivable are reported on the consolidated balance sheets at outstanding amounts, less an allowance for doubtful accounts and discounts. The Company extends credit without requiring collateral. The Company writes off uncollectible receivables when the likelihood of collection is remote. The Company evaluates the collectability of accounts receivable on a regular basis. An allowance, when needed, is based upon various factors including the financial condition and payment history of customers, an overall review of collections experience on other accounts, and economic factors or events expected to affect future collections experience. No accounts have been written off as of March 31, 2016 and December 31, 2015. The Company recorded an allowance of approximately $4.0 million and $3.8 million for expected sales discounts as of March 31, 2016 and December 31, 2015, respectively. |
Deferred Financing Costs | Deferred Financing Costs Deferred financing costs consist of financing costs incurred by the Company in connection with the closing of the Company’s 7.50% Convertible Senior Secured Notes and Secured Notes Payable (see Note 9). The Company amortizes deferred financing costs over the term of the related debt using the effective interest method. When extinguishing debt, the related deferred financing costs are written off. |
Revenue Recognition | Revenue Recognition Revenue from product sales is recognized when persuasive evidence of an arrangement exists; delivery has occurred and title to the product and associated risk of loss has passed to the customer; the price is fixed or determinable; collection from the customer has been reasonably assured; all performance obligations have been met; and returns and allowances can be reasonably estimated. Product sales are recorded net of estimated rebates, chargebacks, discounts, co-pay assistance and other deductions as well as estimated product returns (collectively, “sales deductions”). Our products are distributed through wholesalers and pharmaceutical distributors. Each of these wholesalers and distributors will take title and ownership to the product upon physical receipt of the product and then distribute our products to pharmacies. Royalty Revenue In the third quarter of 2014, the Company received a $30.0 million payment pursuant to a royalty agreement related to the purchase by HC Royalty of certain of the Company’s rights under the agreement with United Therapeutics Corporation related to the commercialization of Orenitram. We have recorded a non-recourse liability related to this transaction and have begun to amortize this amount to recognize royalty revenue as royalties are received by HC Royalty from United Therapeutics. We also recognize non-cash interest expense related to this liability that accrues at an effective interest rate determined based on projections of HC Royalty’s rate of return. We recognized royalty revenue of $1.1 million and $0.6 million for the three months ended March 31, 2016 and 2015, respectively. We recognized interest expense of $1.3 million and $0.8 million for the three months ended March 31, 2016 and 2015, respectively. Sales Deductions Allowances for estimated sales deductions are provided for the following: · Rebates. Rebates include mandated discounts under the Medicaid Drug Rebate Program, the Medicare coverage gap program, as well as negotiated discounts with commercial healthcare providers. Rebates are amounts owed after the final dispensing of products to a benefit plan participant and are based upon contractual agreements or legal requirements with the public sector (e.g. Medicaid) and with private sector benefit providers. The allowance for rebates is based on statutory and contractual discount rates and expected claimed rebates paid based on a plan provider’s utilization. Rebates are generally invoiced and paid quarterly in arrears so that the accrual balance consists of an estimate of the amount expected to be incurred for the current quarter’s activity, plus an accrual balance for known or estimated prior quarters’ unpaid rebates. If actual future rebates vary from estimates, we may need to adjust balances of such rebates to reflect the actual expenditures of the Company with respect to these programs, which would affect revenue in the period of adjustment. · Chargebacks. Chargebacks are discounts that occur when contracted customers purchase directly from an intermediary distributor or wholesaler. Contracted customers, which currently consist primarily of Public Health Service institutions and federal government entities purchasing via the Federal Supply Schedule, generally purchase the product at a discounted price. The distributor or wholesaler, in turn, charges back the difference between the price initially paid by the distributor or wholesaler and the discounted price paid to the distributor or wholesaler by the customer. The allowance for distributor/wholesaler chargebacks is based on known sales to contracted customers. · Distributor/Wholesaler deductions and discounts. U.S. specialty distributors and wholesalers are offered various forms of consideration including allowances, service fees and prompt payment discounts as consideration for distributing our products. Distributor allowances and service fees arise from contractual agreements with distributors and are generally a percentage of the purchase price paid by the distributors and wholesalers. Wholesale customers are offered a prompt pay discount for payment within a specified period. · Co-pay assistance. Patients who pay in cash or have commercial insurance and meet certain eligibility requirements may receive co-pay assistance from the Company. The intent of this program is to reduce the patient’s out of pocket costs. Liabilities for co-pay assistance are based on actual program participation and estimates of program redemption using data provided by third-party administrators. · Returns. Sales of our products are not subject to a general right of return; however, the Company will accept product that is damaged or defective when shipped directly from our warehouse. The Company will accept expired product six months prior and up to 12 months subsequent to its expiry date. Product that has been used to fill patient prescriptions is no longer subject to any right of return. Milestone Payments Milestone payments on licensing agreements are recognized as revenue when the collaborative partner acknowledges completion of the milestone and substantive effort (i.e., effort consistent with amount of the milestone) was necessary to achieve the milestone. Management may recognize revenue contingent upon the achievement of a milestone in its entirety in the period in which the milestone is achieved only if the milestone meets all the criteria to be considered substantive. The Company recorded no milestone revenue during the three months ended March 31, 2016 and March 31, 2015. |
Cost of Product Sales | Cost of Product Sales The cost of product sales consists primarily of materials, third-party manufacturing costs, freight and distribution costs, allocation of labor, quality control and assurance, and other manufacturing overhead costs. |
Income Taxes | Income Taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. Valuation allowances are established to reduce deferred tax assets to the amounts expected to be realized. The Company accounts for uncertain tax positions in its consolidated financial statements when it is more-likely-than-not that the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. The Company’s policy is to recognize any interest and penalties related to income taxes in income tax expense. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-09, “Compensation- Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting” (ASU 2016-09). The standard is intended to simplify several areas of accounting for share-based compensation arrangements, including the income tax impact, classification on the statement of cash flows and forfeitures. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Lease (Topic 842)”. The standard requires a lessee to recognize assets and liabilities on the balance sheet for leases with lease terms greater than 12 months. ASU 2016-02 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2018, and early adoption is permitted. We are currently evaluating the impact that the standard will have on our consolidated financial statements. In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” This ASU more closely aligns the treatment of debt issuance costs with debt discounts and premiums and requires debt issuance costs be presented as a direct deduction from the carrying amount of the related debt. The amendments in this ASU are effective for financial statements issued for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. This guidance has been applied on a retrospective basis and the impact is reflected in the as previously reported column in Note 2. The adoption of ASU No. 2015-03 resulted in a reclassification of deferred financing costs of $232,000 and $104,000 from asset to liability classification on the Company’s consolidated financial statements as of March 31, 2015 and December 31, 2015, respectively. |
Restatement of Financial Stat22
Restatement of Financial Statements (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Restatement of Financial Statements | |
Schedule of restatement on the condensed consolidated balance sheet, consolidated statement of operations and consolidated statement of cash flows | The impact of the restatement and other corrections on the condensed Consolidated Balance Sheet, Consolidated Statement of Operations and Consolidated Statement of Cash Flows as of and for the three month periods ended March 31, 2016 and March 31, 2015 is presented below, in thousands except share and per share data. Three Months Ended March 31, 2016 Consolidated Statement of Operations As Previously Restatement Other (unaudited) Reported Adjustments Corrections As Restated Royalty revenue $ — $ $ $ Total revenue Operating income Interest expense — non-recourse liability related to sale of future royalties — ) ) Total other expense ) ) ) Earnings before income taxes ) Income tax expense Net income ) ) Three Months Ended March 31, 2016 As Previously Restatement Other Consolidated Statements of Cash Flows (unaudited) Reported Adjustments Corrections As Restated Net cash used in investing activities $ ) $ $ ) Net change in cash and cash equivalents ) ) As of March 31, 2016 As Previously Restatement Other Consolidated Balance Sheet (unaudited) Reported Adjustments Corrections As Restated Accrued expenses $ $ $ Non-recourse liability related to sale of future royalties — current portion — Total current liabilities Non-recourse liability related to sale of future royalties — long term — Total liabilities Accumulated deficit ) ) ) ) Total stockholders’ equity ) ) Three Months Ended March 31, 2015 Consolidated Statement of Operations As Previously Restatement Other (unaudited) Reported Adjustments Corrections As Restated Royalty revenue $ — $ $ $ Total revenue Selling, general and administrative Total costs and expenses Operating income ) Interest expense — non-recourse liability related to sale of future royalties — ) ) Total other expense ) ) ) Earnings before income taxes ) ) Income tax expense Net Income ) ) Three Months Ended March 31, 2015 As Previously Restatement Other Consolidated Statements of Cash Flows (unaudited) Reported Adjustments Corrections As Restated Net cash provided by (used in) operating activities $ $ ) $ ) Net cash used in investing activities ) ) Net change in cash and cash equivalents ) ) ) As of March 31, 2015 As Previously Restatement Other Consolidated Balance Sheet (unaudited) Reported Adjustments Corrections As Restated Cash and cash equivalents $ $ ) $ Marketable securities Accrued expenses Total current liabilities Non-recourse liability related to sale of future royalties — long term — Total liabilities Additional paid-in capital Accumulated deficit ) ) ) ) Total stockholders’ equity ) ) As of December 31, 2015 As Previously Restatement Other Consolidated Balance Sheet Reported Adjustments Corrections As Restated Cash and cash equivalents $ $ ) $ Marketable securities Accrued expenses Non-recourse liability related to sale of future royalties — current portion — Total current liabilities Non-recourse liability related to sale of future royalties — long term — Total liabilities Accumulated deficit ) ) ) ) Total stockholders’ equity ) ) |
Fair Value of Financial Instr23
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value of Financial Instruments | |
Schedule of fair value of the financial assets and liabilities | In accordance with the fair value hierarchy described above, the following tables show the fair value of the Company’s financial assets and liabilities that are required to be measured at fair value, in thousands: Fair Value Measurements at March 31, 2016 (unaudited) Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable March 31, Markets Inputs Inputs 2016 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ Fair Value Measurements at December 31, 2015 (restated) Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable December 31, Markets Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ Fair Value Measurements at March 31, 2015 (unaudited) (restated) Significant Total Carrying Quoted Prices Other Significant Value at in Active Observable Unobservable March 31, Markets Inputs Inputs 2015 (Level 1) (Level 2) (Level 3) Assets: Cash and cash equivalents $ $ $ — $ — Marketable securities — Long term marketable securities — — Marketable securities - restricted (SERP) — — Total assets at fair value $ $ $ $ — Liabilities: Derivative liabilities $ $ — $ — $ |
Schedule of assumptions used to calculate fair value of make-whole liability | Volatility 45% Stock Price as of March 31, 2016 $15.21 per share Credit Spread 900 bps Term 1.1 years Dividend Yield 0.0% |
Schedule of Level 3 liabilities included in Non-current Liabilities on the Balance Sheet | The following table presents information about the Company’s Level 3 liabilities as of December 31, 2015 and March 31, 2016 that are included in the Non-Current Liabilities section of the Consolidated Balance Sheets, in thousands: Three Months ended March 31, 2016 (unaudited) Balance at December 31, 2015 $ Changes in fair value of derivative liabilities included in earnings ) Reduction due to conversion of debt to equity ) Balance at March 31, 2016 $ |
Schedule of unrestricted marketable securities | Unrestricted marketable securities held by the Company were as follows, in thousands: At March 31, 2016 (unaudited): Available for Sale Amortized Gross Gross Fair Value Corporate debt securities $ ) $ At December 31, 2015 ( restated ) : Available for Sale Amortized Gross Gross Fair Value Corporate debt securities $ ) $ At March 31, 2015 (unaudited) ( restated ) : Available for Sale Amortized Gross Gross Fair Value Corporate debt securities $ $ $ ) $ |
Schedule of contractual maturities of the unrestricted marketable securities held | The contractual maturities of the unrestricted available for sale marketable securities held by the Company were as follows, in thousands: March 31, 2016 (unaudited) Less Than 1 Year $ 1-5 years Greater Than 5 Years — Total $ |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Inventories | |
Schedule of inventories | Inventories consist of the following, in thousands: March 31, December 31, March 31, 2016 2015 2015 (unaudited) (unaudited) Raw materials $ $ Work in process Finished goods $ $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Property and Equipment | |
Schedule of property and equipment | Property and equipment consist of the following, in thousands: March 31, December 31, March 31, 2016 2015 2015 (unaudited) (unaudited) Computer equipment $ $ $ Software Lab equipment and furniture Leasehold improvements Construction in progress — Less accumulated depreciation and amortization ) ) ) $ $ $ |
Deferred Legal Fees and Intan26
Deferred Legal Fees and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Deferred Legal Fees and Intangible Assets | |
Schedule of gross carrying amount and related accumulated amortization of the intangible assets | The following sets forth the gross carrying amount and related accumulated amortization of the intangible asset, in thousands: March 31, 2016 (unaudited) December 31, 2015 Weighted- Gross Carrying Accumulated Gross Carrying Accumulated Average Life Amount Amortization Amount Amortization Capitalized patent defense costs $ $ $ $ |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Accrued Expenses | |
Schedule of accrued expenses | Accrued expenses are comprised of the following, in thousands, ( restated ) : March 31, December 31, March 31 2016 2015 2015 (unaudited) (unaudited) Accrued professional fees $ $ $ Accrued compensation Accrued clinical trial and clinical supply costs Accrued interest expense Accrued sales and marketing expenses Accrued product costs Other accrued expenses $ $ $ |
Convertible Senior Secured No28
Convertible Senior Secured Notes (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Convertible Senior Secured Notes | |
Summary of issuance of Notes reflected in balance sheet | The table below summarizes activity related to the Notes from issuance on May 3, 2013 through March 31, 2016, in thousands: Gross proceeds $ Initial value of interest make-whole derivative reported as debt discount ) Conversion option reported as debt discount and APIC ) Conversion of debt to equity - principal ) Conversion of debt to equity - accretion of debt discount and deferred financing costs Accretion of debt discount and deferred financing costs December 31, 2015 carrying value, restated Conversion of debt to equity - principal ) Conversion of debt to equity - accretion of debt discount and deferred financing costs Accretion of debt discount and deferred financing costs March 31, 2016 carrying value, unaudited $ |
Summary Stockholders' Equity (T
Summary Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Summary Stockholders' Equity | |
Schedule of activity in certain captions within Stockholders' Equity | The following summary table provides details related to the activity in certain captions within Stockholders’ Equity for the three month period ended March 31, 2016, in thousands. Common Stock Additional Paid-in (unaudited) Balance, December 31, 2015 $ $ Share-based compensation — Exercise of stock options — Equity issued on note conversion Balance, March 31, 2016 $ $ |
Share-Based Payments (Tables)
Share-Based Payments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Share-Based Payments | |
Schedule of share-based compensation recognized related to the grant of employee and non-employee stock options, SARS and non-vested stock | Share-based compensation recognized related to the grant of employee and non-employee stock options, SAR, potential Employee Stock Purchase Plan (ESPP) awards and non-vested stock was as follows, in thousands: March 31, 2016 2015 (unaudited) Research and development $ $ Selling, general and administrative Total $ $ |
Summary of stock option and SAR activity | Number of Weighted- Weighted- Outstanding, December 31, 2015 $ Granted (unaudited) $ Exercised (unaudited) ) $ Forfeited or expired (unaudited) ) $ Outstanding, March 31, 2016 (unaudited) $ As of December 31, 2015: Vested and expected to vest $ Exercisable $ As of March 31, 2016: Vested and expected to vest (unaudited) $ Exercisable (unaudited) $ |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings per Share | |
Schedule of common stock equivalents excluded in the calculation of diluted loss per share | Three Months ended March 31, 2016 2015 (unaudited) Shares underlying Convertible Senior Secured Notes — Warrants to purchase common stock — |
Schedule of computation of basic and diluted net income per share | The following table sets forth the computation of basic and diluted net income per share for the three months ended March 31, 2016 and March 31, 2015, in thousands, except share and per share amounts, restated: Three Months ended March 31, 2016 2015 (unaudited) Numerator, in thousands: Net income used for calculation of basic EPS $ $ Interest expense on convertible debt — Changes in fair value of derivative liabilities ) — Loss on extinguishment of debt Loss on extinguishment of outstanding debt, as if converted ) — Total adjustments ) — Net income used for calculation of diluted EPS $ $ Denominator: Weighted average shares outstanding, basic Effect of dilutive potential common shares: Shares underlying Convertible Senior Secured Notes — Shares issuable to settle interest make-whole derivatives — Stock options, stock appreciation rights, and non-vested stock options Total potential dilutive common shares Weighted average shares outstanding, diluted Net income per share, basic $ $ Net income per share, diluted $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies | |
Schedule of future minimum lease payments under non-cancelable operating leases | Future minimum lease payments under non-cancelable operating leases as of March 31, 2016 are as follows, in thousands, unaudited: Year ending December 31: 2016 (remaining) $ 2017 2018 2019 Thereafter $ |
Organization and Business (Deta
Organization and Business (Details) | 3 Months Ended |
Mar. 31, 2016product | |
Organization and Business | |
Number of proprietary products in clinical development | 2 |
Restatement of Financial Stat34
Restatement of Financial Statements - Consolidated Statement of Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Impact of Restatement on the Condensed Consolidated Financial Statements | ||
Maturity of Time Deposits | 91 days | |
Royalty revenues | $ 1,119 | $ 605 |
Total revenue | 44,194 | 28,738 |
Selling, general and administrative | 25,160 | 19,403 |
Total costs and expenses | 37,757 | 24,704 |
Operating income (loss) | 6,437 | 4,034 |
Interest expense non-recourse liability related to sale of future royalties | (1,279) | (759) |
Total other expense | (1,412) | (3,210) |
Earnings (loss) before income taxes | 5,025 | 824 |
Income tax expense | 200 | 86 |
Net income (loss) | 4,825 | 738 |
As Previously Reported | ||
Impact of Restatement on the Condensed Consolidated Financial Statements | ||
Total revenue | 43,075 | 28,133 |
Selling, general and administrative | 19,402 | |
Total costs and expenses | 24,703 | |
Operating income (loss) | 5,318 | 3,430 |
Total other expense | (133) | (2,451) |
Earnings (loss) before income taxes | 5,185 | 979 |
Income tax expense | 198 | 62 |
Net income (loss) | 4,987 | 917 |
Restatement Adjustments | ||
Impact of Restatement on the Condensed Consolidated Financial Statements | ||
Royalty revenues | 1,119 | 605 |
Total revenue | 1,119 | 605 |
Operating income (loss) | 1,119 | 605 |
Interest expense non-recourse liability related to sale of future royalties | (1,279) | (759) |
Total other expense | (1,279) | (759) |
Earnings (loss) before income taxes | (160) | (154) |
Net income (loss) | (160) | (154) |
Other Corrections | ||
Impact of Restatement on the Condensed Consolidated Financial Statements | ||
Selling, general and administrative | 1 | |
Total costs and expenses | 1 | |
Operating income (loss) | (1) | |
Earnings (loss) before income taxes | (1) | |
Income tax expense | 2 | 24 |
Net income (loss) | $ (2) | $ (25) |
Restatement of Financial Stat35
Restatement of Financial Statements - Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Impact of Restatement on the Condensed Consolidated Financial Statements | ||
Net cash provided by (used in) operating activities | $ (3,142) | $ (265) |
Net cash used in investing activities | (10,650) | (11,120) |
Net cash provided by financing activities | 124 | 147 |
Net change in cash and cash equivalents | (13,668) | (11,238) |
As Previously Reported | ||
Impact of Restatement on the Condensed Consolidated Financial Statements | ||
Net cash provided by (used in) operating activities | 503 | |
Net cash used in investing activities | (11,304) | (11,236) |
Net change in cash and cash equivalents | (14,322) | (10,586) |
Other Corrections | ||
Impact of Restatement on the Condensed Consolidated Financial Statements | ||
Net cash provided by (used in) operating activities | (768) | |
Net cash used in investing activities | 654 | 116 |
Net change in cash and cash equivalents | $ 654 | $ (652) |
Restatement of Financial Stat36
Restatement of Financial Statements - Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | Dec. 31, 2014 |
Impact of Restatement on the Condensed Consolidated Financial Statements | ||||
Cash and cash equivalents | $ 19,830 | $ 33,498 | $ 25,158 | $ 36,396 |
Marketable securities | 25,427 | 28,692 | 39,678 | |
Accrued expenses | 22,915 | 25,153 | 16,482 | |
Non-recourse liability related to sale of future royalties - current portion | 1,067 | 497 | ||
Total current liabilities | 55,533 | 56,934 | 27,509 | |
Non-recourse liability related to sale of future royalties - long term | 29,621 | 30,031 | 30,179 | |
Total liabilities | 97,365 | 100,619 | 75,654 | |
Additional paid-in capital | 267,576 | 263,955 | 252,483 | |
Accumulated deficit | (170,684) | (175,509) | (188,715) | |
Total stockholders' equity | 97,109 | 88,007 | 63,751 | |
As Previously Reported | ||||
Impact of Restatement on the Condensed Consolidated Financial Statements | ||||
Cash and cash equivalents | 34,152 | 25,810 | ||
Marketable securities | 28,038 | 39,026 | ||
Accrued expenses | 22,573 | 24,813 | 15,828 | |
Total current liabilities | 54,124 | 56,097 | 26,855 | |
Total liabilities | 66,335 | 69,751 | 45,053 | |
Additional paid-in capital | 252,341 | |||
Accumulated deficit | (139,654) | (144,641) | (157,740) | |
Total stockholders' equity | 128,139 | 118,875 | 94,584 | |
Restatement Adjustments | ||||
Impact of Restatement on the Condensed Consolidated Financial Statements | ||||
Non-recourse liability related to sale of future royalties - current portion | 1,067 | 497 | ||
Total current liabilities | 1,067 | 497 | ||
Non-recourse liability related to sale of future royalties - long term | 29,621 | 30,031 | 30,179 | |
Total liabilities | 30,688 | 30,528 | 30,179 | |
Accumulated deficit | (30,688) | (30,528) | (30,179) | |
Total stockholders' equity | (30,688) | (30,528) | (30,179) | |
Other Corrections | ||||
Impact of Restatement on the Condensed Consolidated Financial Statements | ||||
Cash and cash equivalents | (654) | (652) | ||
Marketable securities | 654 | 652 | ||
Accrued expenses | 342 | 340 | 654 | |
Total current liabilities | 342 | 340 | 654 | |
Total liabilities | 342 | 340 | 422 | |
Additional paid-in capital | 142 | |||
Accumulated deficit | (342) | (340) | (796) | |
Total stockholders' equity | $ (342) | $ (340) | $ (654) |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Segments (Details) | 3 Months Ended |
Mar. 31, 2016segment | |
Basis of Presentation | |
Number of operating segments | 1 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies - SERP (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Supplemental Employee Retirement Plan, Defined Benefit [Member] | ||
Marketable Securities - Restricted | ||
Marketable securities - restricted | $ 255,000 | $ 263,000 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies - Accounts Receivable, net (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Accounts Receivable, net | ||
Accounts receivable written off | $ 0 | $ 0 |
Allowance for expected sales deductions | $ 4 | $ 3.8 |
Convertible Notes Payable [Member] | ||
Deferred Financing Costs | ||
Interest rate (as a percent) | 7.50% |
Summary of Significant Accoun40
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Sep. 30, 2014 | |
Royalty Revenue [Abstract] | |||
Non-recourse liability related to sale of future royalties | $ 30,000 | ||
Royalty revenues | $ 1,119 | $ 605 | |
Non-cash interest expense/income on liability related to sale of future royalties | $ 1,279 | 759 | |
Sales return period prior to expiry date | 6 months | ||
Sales return period subsequent to expiry date | 12 months | ||
Milestone revenues recorded | $ 0 | $ 0 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Simplifying the Presentation of Debt Issuance Costs | |||
Assets | $ 194,474,000 | $ 188,626,000 | $ 139,405,000 |
Liabilities | $ 97,365,000 | 100,619,000 | 75,654,000 |
Accounting Standards Update ("ASU") 2015-03 - Simplifying the Presentation of Debt Issuance Costs | |||
Simplifying the Presentation of Debt Issuance Costs | |||
Assets | (104,000) | (232,000) | |
Liabilities | $ (104,000) | $ (232,000) |
Fair Value of Financial Instr42
Fair Value of Financial Instruments - Carrying Value (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Assets: | |||
Marketable securities | $ 25,427 | $ 28,692 | $ 39,678 |
Long term marketable securities | 68,790 | 55,009 | 27,315 |
Liabilities: | |||
Derivative liabilities | 535 | 854 | 2,691 |
Total Carrying Value | Recurring | |||
Assets: | |||
Cash and cash equivalents | 19,830 | 33,498 | 25,158 |
Marketable securities | 25,427 | 28,692 | 39,678 |
Long term marketable securities | 68,790 | 55,009 | 27,315 |
Marketable securities - restricted (SERP) | 255 | 263 | 267 |
Total assets at fair value | 114,302 | 117,462 | 92,418 |
Liabilities: | |||
Derivative liabilities | 535 | 854 | 2,691 |
Quoted Prices in Active Markets (Level 1) | Recurring | |||
Assets: | |||
Cash and cash equivalents | 19,830 | 33,498 | 25,158 |
Marketable securities | 654 | 654 | 652 |
Total assets at fair value | 20,484 | 34,152 | 25,810 |
Significant Other Observable Inputs (Level 2) | Recurring | |||
Assets: | |||
Marketable securities | 24,773 | 28,038 | 39,026 |
Long term marketable securities | 68,790 | 55,009 | 27,315 |
Marketable securities - restricted (SERP) | 255 | 263 | 267 |
Total assets at fair value | 93,818 | 83,310 | 66,608 |
Significant Unobservable Inputs (Level 3) | Recurring | |||
Liabilities: | |||
Derivative liabilities | $ 535 | $ 854 | $ 2,691 |
Fair Value of Financial Instr43
Fair Value of Financial Instruments - Fair Value Assumptions (Details) | 3 Months Ended |
Mar. 31, 2016$ / shares | |
Assumptions used to calculate fair value of interest make-whole liability using Monte-Carlo simulation with a Black-Scholes lattice model | |
Volatility (as a percent) | 45.00% |
Stock Price (in dollars per share) | $ 15.21 |
Credit Spread (as a percent) | 9.00% |
Term | 1 year 1 month 6 days |
Dividend Yield (as a percent) | 0.00% |
Convertible Notes Payable [Member] | |
Assumptions used to calculate fair value of interest make-whole liability using Monte-Carlo simulation with a Black-Scholes lattice model | |
Interest rate (as a percent) | 7.50% |
Fair Value of Financial Instr44
Fair Value of Financial Instruments - Level 3 (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 | |
Interest Make-Whole Liability | |||
Carrying value of the convertible notes | $ 5,627 | $ 7,085 | $ 11,476 |
Face value of the convertible notes | 6,600 | ||
Estimated fair value of the convertible notes | 20,000 | ||
Significant Unobservable Inputs (Level 3) | Derivative Financial Instruments, Liabilities [Member] | |||
Interest Make-Whole Liability | |||
Balance at the beginning of the period | 854 | ||
Changes in fair value of derivative liabilities included in earnings | (101) | ||
Reduction due to conversion of debt to equity | (218) | ||
Balance at the end of the period | $ 535 |
Fair Value of Financial Instr45
Fair Value of Financial Instruments - Unrestricted Marketable Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Fair Value of Financial Instruments | |||
Corporate debt securities, Amortized Cost | $ 94,049 | $ 84,189 | $ 67,058 |
Corporate debt securities, Gross Unrealized Gains | 300 | 5 | 15 |
Corporate debt securities, Gross Unrealized Losses | (132) | (493) | (80) |
Corporate debt securities, Fair Value | 94,217 | 83,701 | 66,993 |
Contractual maturities of the unrestricted marketable securities held | |||
Less Than 1 Year | 25,427 | ||
1-5 years | 68,790 | ||
Corporate debt securities, Fair Value | $ 94,217 | $ 83,701 | $ 66,993 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Inventories | |||
Raw materials | $ 2,371 | $ 2,887 | $ 3,132 |
Work in process | 4,264 | 3,946 | 6,328 |
Finished goods | 6,409 | 5,754 | 4,242 |
Total inventories | $ 13,044 | $ 12,587 | $ 13,702 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Property and equipment | |||
Property and equipment, gross | $ 11,121,000 | $ 8,927,000 | $ 10,842,000 |
Less accumulated depreciation and amortization | (7,255,000) | (6,446,000) | (6,968,000) |
Property and equipment, net | 3,866,000 | 2,481,000 | 3,874,000 |
Depreciation and amortization expense | 287,000 | 156,000 | |
Computer Equipment [Member] | |||
Property and equipment | |||
Property and equipment, gross | 1,130,000 | 932,000 | 1,112,000 |
Computer Software, Intangible Asset [Member] | |||
Property and equipment | |||
Property and equipment, gross | 1,463,000 | 314,000 | 307,000 |
Lab Equipment and Furniture [Member] | |||
Property and equipment | |||
Property and equipment, gross | 5,878,000 | 5,235,000 | 5,667,000 |
Leasehold Improvements [Member] | |||
Property and equipment | |||
Property and equipment, gross | 2,642,000 | $ 2,446,000 | 2,642,000 |
Construction in progress | |||
Property and equipment | |||
Property and equipment, gross | $ 8,000 | $ 1,114,000 |
Deferred Legal Fees and Intan48
Deferred Legal Fees and Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Additional disclosures | |||
Deferred legal fees | $ 11,444,000 | $ 7,672,000 | $ 22,503,000 |
Net book value of intangible assets | 16,108,000 | 167,000 | $ 976,000 |
Amortization expense | $ 142,000 | $ 57,000 | |
Patent Defense Costs [Member] | |||
Finite lived intangible assets disclosures | |||
Weighted-Average Life | 9 years 6 months | 9 years 6 months | |
Gross Carrying Amount | $ 16,267,000 | $ 994,000 | |
Accumulated Amortization | $ 159,000 | $ 18,000 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2015 |
Accrued Expenses | |||
Accrued professional fees | $ 9,870 | $ 10,057 | $ 3,546 |
Accrued compensation | 5,523 | 7,519 | 7,334 |
Accrued clinical trial and clinical supply costs | 2,498 | 3,677 | 1,698 |
Accrued interest expense | 393 | 295 | 646 |
Accrued sales and marketing expenses | 1,139 | 434 | 1,657 |
Accrued product costs | 11 | 113 | 131 |
Other accrued expenses | 3,481 | 3,058 | 1,470 |
Total | $ 22,915 | $ 25,153 | $ 16,482 |
Convertible Senior Secured No50
Convertible Senior Secured Notes (Details) - USD ($) | 3 Months Ended | 32 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Details of Notes reflected in balance sheet | |||
Remaining outstanding balance | $ 5,627,000 | $ 11,476,000 | $ 7,085,000 |
Loss on extinguishment of debt | 382,000 | 2,134,000 | |
Convertible Notes Payable [Member] | |||
Details of Notes reflected in balance sheet | |||
Gross proceeds | 90,000,000 | ||
Initial value of interest make-whole derivative reported as debt discount | (9,270,000) | ||
Conversion option reported as debt discount and APIC | (22,336,000) | ||
Conversion of debt to equity - principal | (1,962,000) | (21,400,000) | (81,463,000) |
Conversion of debt to equity - accretion of debt discount and deferred financing costs | 424,000 | 25,003,000 | |
Accretion of debt discount and deferred financing costs | 80,000 | 5,151,000 | |
Remaining outstanding balance | $ 5,627,000 | $ 7,085,000 | |
Shares of common stock issued in conversion of Notes | 400,000 | ||
Shares of common stock issued in settlement of the interest make-whole provision | 21,000 | ||
Loss on extinguishment of debt | $ 400,000 | $ 2,100,000 |
Summary Stockholders' Equity (D
Summary Stockholders' Equity (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Beginning balance | $ 88,007 |
Ending balance | 97,109 |
Common Stock [Member] | |
Beginning balance | 49 |
Ending balance | 49 |
Additional Paid-in Capital [Member] | |
Beginning balance | 263,955 |
Share-based compensation | 1,359 |
Exercise of stock options | 124 |
Equity issued on note conversion | 2,138 |
Ending balance | $ 267,576 |
Share-Based Payments - 2012 Pla
Share-Based Payments - 2012 Plan (Details) - 2012 Plan | 3 Months Ended |
Mar. 31, 2016installmentshares | |
Share-based payments | |
Maximum number of shares of common stock provided for issuance | shares | 4,000,000 |
Stock Option | |
Share-based payments | |
Number of annual installments in which the awards would generally vest starting on the first anniversary of the date of grant | installment | 4 |
Contractual term | 10 years |
Directors | Stock Option | |
Share-based payments | |
Vesting period | 1 year |
Share-Based Payments - Share-ba
Share-Based Payments - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share-based Payments | ||
Share-based compensation recognized | $ 1,359 | $ 902 |
Research and Development Expense [Member] | ||
Share-based Payments | ||
Share-based compensation recognized | 288 | 204 |
Selling, General and Administrative Expenses [Member] | ||
Share-based Payments | ||
Share-based compensation recognized | $ 1,071 | $ 698 |
Share-Based Payments - Activity
Share-Based Payments - Activity (Details) - Stock option and Stock Appreciation Rights - $ / shares | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Number of Options and SAR | ||
Outstanding at the beginning of the period (in shares) | 2,699,007 | |
Granted (in shares) | 1,016,750 | |
Exercised (in shares) | (25,807) | |
Forfeited and expired (in shares) | (1,250) | |
Outstanding at the end of the period (in shares) | 3,688,700 | 2,699,007 |
Vested and expected to vest (in shares) | 3,605,090 | 2,654,381 |
Exercisable (in shares) | 1,472,911 | 901,672 |
Weighted-Average Exercise Price | ||
Outstanding at the beginning of the period (in dollars per share) | $ 8.94 | |
Granted (in dollars per share) | 12.98 | |
Exercised (in dollars per share) | 4.79 | |
Forfeited or expired (in dollars per share) | 10.33 | |
Outstanding at the end of the period (in dollars per share) | 10.08 | $ 8.94 |
Vested and expected to vest (in dollars per share) | 10.05 | 8.93 |
Exercisable (in dollars per share) | $ 8.36 | $ 7.95 |
Weighted-Average Remaining Contractual Term | ||
Outstanding at the end of the period | 8 years 3 months 22 days | 7 years 11 months 1 day |
Vested and expected to vest | 8 years 3 months 11 days | 7 years 10 months 24 days |
Exercisable | 7 years 2 months 19 days | 6 years 10 months 10 days |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Numerator, in thousands: | ||
Net income used for calculation of basic EPS | $ 4,825 | $ 738 |
Interest expense on convertible debt | 179 | |
Changes in fair value of derivative liabilities | (101) | |
Loss on extinguishment of debt | 382 | |
Loss on extinguishment of outstanding debt, as if converted | (1,229) | |
Total adjustments | (769) | |
Net income used for calculation of diluted EPS | $ 4,056 | $ 738 |
Denominator: | ||
Weighted average shares outstanding, basic | 49,240,099 | 44,563,299 |
Effect of dilutive potential common shares: | ||
Shares underlying Convertible Senior Secured Notes | 1,383,472 | |
Shares issuable to settle interest make-whole derivatives | 71,537 | |
Stock options, stock appreciation rights, and non-vested stock options | 456,964 | 337,999 |
Total potential dilutive common shares | 1,911,973 | 337,999 |
Weighted average shares outstanding, diluted | 51,152,072 | 44,901,298 |
Net income per share, basic | $ 0.10 | $ 0.02 |
Net income per share, diluted | $ 0.08 | $ 0.02 |
Convertible Notes Payable [Member] | ||
Loss Per Share | ||
Common stock equivalents excluded in the calculation of diluted loss per share | 6,071,894 | |
Warrant [Member] | ||
Loss Per Share | ||
Common stock equivalents excluded in the calculation of diluted loss per share | 21,800 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Income Taxes | ||
Pre-tax income | $ 5,025 | $ 824 |
Income tax expense | $ 200 | $ 86 |
Commitments and Contingencies57
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Commitments and Contingencies | ||
Additional period for which the entity may elect to extend the term of the lease | 5 years | |
Additional tenant improvement allowance | $ 2,100 | |
Tenant improvement allowance utilized and included in fixed assets and deferred rent | 0 | $ 0 |
Amount available for tenant improvements | 500 | |
Rent expense | 700 | $ 700 |
Future minimum lease payments under non-cancelable operating leases | ||
2016 (remaining) | 1,027 | |
2,017 | 1,294 | |
2,018 | 1,314 | |
2,019 | 1,341 | |
Thereafter | 454 | |
Total | $ 5,430 |